Brussels pours cold water on trading scheme

By Justin Stares, Brussels - Thursday 6 March 2008

The EC is considering action to reduce shipping’s ‘carbon footprint’. The EC is considering action to reduce shipping’s ‘carbon footprint’.
INCORPORATING shipping into the European Union’s emissions trading scheme would be difficult because cargo, unlike passengers, does not mind being re-routed, the European commission has admitted. 

If carbon dioxide caps and allowances were based on the route a ship took to Europe, owners and operators were likely to transhipment just outside the EU to reduce costs, a commission official told a Brussels seminar. 

Trading scheme “evasion” poses a problem in the maritime world, where flexibility reigns, whereas airlines are on the other hand more likely to follow scheduled paths, the official from the directorate-general for the environment told a gathering brought together by British MEP Caroline Lucas. “Lines could just tranship,” he said. 

The diversity of shipping, where a multitude of different types of vessel plying dozens of trades, also distinguishes it from the airline world, where trading greenhouse gas allowances is seen as more feasible. 

Other problems include the allocation of allowances, given that ships change owners and charterers frequently; the “poor” quality of data; concern as to what would be possible under international law; and the possibility of retaliatory measures elsewhere in the world, though this last concern was downplayed.
A representative from the European Community Shipowners’ Association added that increasing maritime costs could have the perverse effect of driving freight onto the roads, where per-tonne-kilometre emission rates are higher. “This is not a zero-sum game,” he said. 

The commission is now considering what regional action to take, if any, to reduce shipping’s so-called ‘carbon footprint’. The issue is also under discussion at the International Maritime Organization. 

Incorporating shipping into the EU’s existing cap and trade mechanism is one option, though given the pitfalls most speakers at the seminar seemed unconvinced. A bespoke trading scheme for shipping is another, and there at least two potential schemes under discussion among experts. 

To get around the evasion problem, one suggestion is for ships to be allocated allowances over a certain time period based. Bunker purchase data could be used, it was suggested. 

Other options include differentiated harbour dues. But any kind of green “tax” on fuel would be difficult to introduce because tax issues require unanimity in the EU - increasingly hard to achieve now that there are 27 member states. 

If IMO progress is considered unsatisfactory, the commission is expected to come up with a proposal of its own next year, which could come into force in 2012, or later. 

”There have been a lot of nice resolutions but no action from IMO,” said Ms Lucas. “It’s now time for the commission to make good on its pledges of the past. Why is there no trading scheme for shipping?” 

* Read Lloyd’s List Newsroom Blog – Numbers game and Death by Shipping - join in the debate.
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